Riches and Ashes

Charles Dickens captured the modern paradox of a double tier society: the best of times, the worst of times. Agreed, Dickens phrase has a global meaning, given modern context. At worst, the world is at risk because politicians and policy makers are exploiting economic paradoxes as slickly nestled as Faberge eggs.

Tax cuts don't produce jobs, especially when the income and wealth of the rich are no longer tied to production and job creation. Tax cuts don't create jobs, when wealth creates financial instruments, electronic trades, and tax holidays that allow wealth to be churned without employment impact. Tax cuts don't create jobs, when the marginal benefit of additional cuts is so minimal, that these cuts really represent diminishing returns (search the paradox of toil).

Europe, whose serious writings about macroeconomic behavior go back to the 1700s, has chosen to ignore its entire body of knowledge and experience. The working economies of the Union hope they can escape the pain their collective position will inflict on its weaker members.

In the best of times, politicians believe they will able to step into the ruins and blame the devastation on their opponents. Then they intent to use state authority to create a new society organized for the benefit of its supporters.

As much as one appreciates Paul Krugman's rationality and his warnings to ignore paradoxes at great peril, he forgets that since Genghis Khan, political conquerors trash, pillage, and burn their conquered territories, smash the idols, and destroy wealth.

No political takeover keeps the previous system intact (ie, “Obamacare”). The point is to cause pain and intimidation, to weaken opposition—and to remake the golden calves in the image of the new regime.

It is telling that SC governor Nikki Haley didn't invite the state's Democratic legislators to her session-end barbeque. Those who came by force of habit were turned back.